Mr. President, Here's a Rear End You Can Kick: Goldman Sachs'

Last week, President Barack Obama told us he is looking for someone's "ass to kick." He seems to be still looking for one, so perhaps he could use some suggestions.

Two candidates immediately come to mind. The first one is obvious: the hapless chairman of BP, whose reaction to the oil crisis gushing in the Gulf of Mexico was, "I'd like to get my life back." The shallowness and selfishness of that comment was so apparent to everyone but him -- 11 workers lost their lives in the April 20 oil rig explosion, and countless people's livelihoods are at risk -- so kicking Tony Hayward is almost too easy. It would be like taking candy from a baby. Besides, the British are our friends and they don't want Obama to kick BP's backside.

In any case, there's a far better candidate to pursue than a weak-kneed U.K. executive. If Obama really wants to let loose, as film director Spike Lee exhorts him to do, then he could find no better villain than Lloyd Blankfein, the chief executive of Goldman Sachs.

Here's why.

As any bully knows, there's no better strategy than to kick someone who's already down. According to a recent NBC/Wall Street Journal poll, no company in the United States is more disliked than Goldman Sachs. None. Not Toyota, which tried to cover up the need to recall millions of cars. Not Citibank, which survives because U.S. taxpayers threw it a $45 billion lifeline. Not AIG, which got $180 billion. Not even BP is disliked as much as Goldman Sachs.

That's right. BP has a better reputation than Goldman Sachs, which is scraping the bottom with a 4 percent positive rating and a whopping 50 percent negative rating. And the news gets worse. As Felix Salmon of Reuters reports, the public has had a negative view of Goldman Sachs for an entire year, while we've only recently started hating BP. And Salmon thinks Goldman Sachs will stay in the dumps for the foreseeable future.

So, Mr. President, go ahead and kick Blankfein. Get mad at Goldman and all the other Wall Street whizzes for the financial destruction they wrought on our economy.

In fact, you should get everyone mad at them, Mr. President. You should remind us that if Goldman Sachs and others had not sold trillions of dollars of toxic securities stuffed with subprime mortgages, our homes might now sell for more than they did in 2003, one out of 10 homeowners might not be unable to make their monthly mortgage payments, and more than $13 trillion in wealth might not have been destroyed. Remind us that 15 million Americans are unemployed, a record 4 million have not worked in more than a year, and more than 1.1 million have simply given up looking for jobs because none are available.

Just in case we're not angry enough, remind everyone that Goldman Sachs profits skyrocketed to more than $20 billion last year. Tell us that back in the pre-crisis year of 2007, Blankfein was paid a record $68 million. These figures are mind-boggling, so to put them in terms the American worker can understand, tell us that before the crisis hit, a typical U.S. household earned about $46,000 a year, but a top Goldman Sachs trader made that much in an hour and a half.

If you are serious about passing financial reform, the timing to pick on Goldman Sachs couldn't be better. As Michael Lewis reports in "The Big Short," and as the Financial Crisis Inquiry Commission and the Securities and Exchange Commission are learning, Goldman Sachs (along with many banks, hedge funds and other financial institutions) knew full well that the securities they were marketing as gold-plated were filled with toxic junk. The SEC made this perfectly clear by charging Goldman Sachs with civil fraud in its disastrous synthetic collateralized debt obligation deal known as Abacus, which Goldman sold in 2006.

But the civil fraud charge is not Goldman's only problem. For those disinclined to read dense SEC filings or to follow excruciating Senate hearings, Rep. Carl Levin of Michigan, chairman of the Senate Permanent Subcommittee on Investigations, cut to the chase at hearings on the problem in April: "You knew it was a s----- deal and that's what your e-mail showed. . . . You're trying to sell a s----- deal and it's your top priority. . . . Should Goldman Sachs be trying to sell a s----- deal?"

Levin was simply quoting the Goldman Sachs banker who called his $1 billion hybrid collateralized debt obligation, known as Timberwolf, "one s----- deal" -- and the banker knew what he was talking about. In just five months, Timberwolf's value had plummeted by 80 percent. An Australian investor snookered into that deal is now suing Goldman Sachs for fraud.

Goldman Sachs has many tricks up its sleeve. The SEC is looking into another billion-dollar toxic deal known as Hudson Mezzanine that a Goldman banker called junk. As the Greek government is now learning, back in 2002, Goldman Sachs used a currency swap deal to make Greece's financial situation look less dire than it was just so the Greeks could join the euro club.

No one expects the president to start screaming. But, we expect him to do more than toss off some easy throwaway lines, such as telling Steve Kroft on "60 Minutes" that "I didn't run for office to be helping out a bunch of fat cat bankers on Wall Street," or lecturing Wall Street about its reckless and irresponsible behavior, as he did at the Cooper Union in New York in April.

In other words, the president has failed to show us he has what it takes to stand up to Wall Street.

And, as sure as water flows downhill, the lack of presidential push back has opened the floodgates to the lobbyists. As the Center for Public Integrity reports, business, trade groups, associations and other organizations have sent more than 3,000 lobbyists to influence how Congress will design financial reform. Robert Kuttner, writing for AlterNet, says: "The financial reform battle is an epic David-Goliath contest. The banking lobby spends more in a day than Americans for Financial Reform's annual budget."

Over the next couple of weeks, congressional negotiators will be trying to work out their differences and craft a bill that will prevent Wall Street from again destroying Main Street. Unfortunately, the first signs coming from the conference are not good, with Republicans charging the Democrats with operating in secret and the Democrats caving in on the tough rules that would make Wall Street pay for the damage it caused.

The president doesn't need to unravel the complexity of Wall Street's securities (although Jon Stewart would like him to) to get mad at the financial destruction that Lloyd Blankfein and the rest of the Wall Street bankers brought upon the U.S. economy.

But, he must do a lot more than dispassionately say he's looking for an "ass to kick" for us to believe that he really means it when he says that he is not going to let Wall Street go unpunished.

To help him find his first target, the president should head over to 200 West St. in Manhattan, where Goldman Sachs has a brand-new $1.2 billion office building where its executives have grand views of the Hudson River.

Oh, and one more thing. Even though Goldman made $5.6 billion in 2005, New York City still gave the firm a $200 million tax break to build its offices. And guess what -- New York City now has a nearly $5 billion budget deficit.

Are you mad now, Mr. President?